Archive for the ‘Golf’ Category

UCCF 10/9/14: $600,000 More For Kemper

To see how much KemperSports has sucked out of the county one need only look at the resolutions passed over the years:

2011-255: authorizing the First Amendment to Management Agreement with KemperSports Management, North Brook, Illinois, to include Golf Maintenance Services.

2013-1084: Amending Resolution Number 2011-255, an agreement with KemperSpoorts Management, North Brook, Illinois to include operational expenses for the management and maintenance of the golf courses as required by the contract document for the period of January 1, 2014 through June 30, 2014 in an amount not to exceed $3,112,919.

2014-534: Amending Resolution Number 2013-1084, to increase the operational funding for Golf Course Operations through October 31, 2014 in an amount not to exceed $2,238,264 for a total authorization through October 31, 2014 in an amount not to exceed $5,351,183.

2014-796: Amending Resolution Number 2014-534 to increase the operational funding for golf course operations through October 31, 2014 in the amount of $600,000 for a new total not to exceed $5,951,183.

That last one was apparently good news. What do you think?
.

.
A clue as to what Armando Sanchez is going on about is in this week’s Westfield Leader story on the new Kemper contract which explains:

Under the new agreement, Union County will no longer receive total revenues from the food and beverage operation at the Galloping Hill banquet facility or the pro shop at the clubhouse. Instead, the county will receive 7 percent of the food and beverage and pro shop revenues. Mr. Sanchez estimated the county share would amount to between $250,000 and $350,000 per year under the new contract with Kemper. The new contract begins on Saturday, November 1.

So this banquet center that is being turned over to Kemper to make their profits and which cost county taxpayers around $15 million to build will return about $300,000 annually to the county.  That means, if we ignore the time value of money, this deal should turn a profit around the year 2064.  However if you take into account the time value of money, assuming an interest rate of even 2%, then that 2064 date gets moved back a bit………………….to infinity…….and that’s only if all these rosy assumptions get met.  Is Kemper seriously anticipating grossing $4.3 million annually ($300,000 / .07) in food and beverage money?

Oak Ridge Golf Course was closed in 2009 under the pretense that it lost $450,000 in 2008.  It did not but what we now have are golf operations in Union County that will likely be losing, when debt repayments are factored in, about $2 million annually which will only escalate with each time county officials find themselves at a negotiating table with Kemper.

Where’s the Kemper Resolution?

At the October 2, 2014 Agenda Meeting (page 4 of 8) the Department of Parks had three resolutions for the freeholders’ consideration.  The first was on hiring a tree-planter and the other two were:

2. Amending Resolution Number 2014-534 to increase the operation funding for golf course operations through October 31, 2014 in the amount of $600,000 for a new total not to exceed $5,951,183.

3. Authorizing the County manager to enter into a contract with Kemper Sports Management for Golf Management Services and Concessionaire for the Pro Shop and all Food and Beverage sales for a period of 60 Months (5 years), commencing on November 1, 2014 and ending on October 31, 2019 to provide the necessary golf course management services in the total amount not to exceed $509,724; and a concession fee to the County of Union of seven (7%) each year of the gross revenue from the Pro Shop and all of food and beverage sales.

There was some discussion of the “good news”:
.

.
But the recently released agenda for tonight’s regular meeting has one resolution:

2014-796: Amending Resolution Number 2014-534 to increase the operation funding for golf course operations through October 31, 2014 in the amount of $600,000 for a new total not to exceed $5,951,183.

But, curiously, no resolution on Kemper.

Questioning the Kemper Extension

The June 19 freeholder agenda meeting included these proposed resolutions:

1. Amending Resolution Number 2009-615, to extend the contract with Kemper Sports Management from August 1, 2014 to October 31, 2014; and also amending Resolution Number 2013-764 to increase the management fees by an amount not to exceed $40,200.00 for a total management fee for 2014 in an amount not to exceed $134,000.

2. Amending Resolution Number 2013-1084, to increase the operational funding for Golf Course Operations through October 31, 2014 in an amount not to exceed $2,238,264 for a total authorization through October 31, 2014 in an amount not to exceed $5,351,183.

The freeholders had a question:

Continue reading

UCCF 6/12/14: Golf Costs 2013

2014-472: Authorizing County Manager to issue the incentive fee payment for calendar year 2013 in the amount of $143,400 to Kemper Sports Management as per Section 7.4 of the Management Agreement.
.
Details on how that amount was arrived at:
.

.

So that’s $6.3 million in reported revenue for 2013.  How about expenses?

Continue reading

Will KemperSports Continue Running Golf in Union County?

The management contract that brought in KemperSports to run golf operations for Union County in 2009 runs out this month and today’s Freeholder agenda meeting includes these resolutions for consideration:

Continue reading

Is Galloping Hill Now a Moneymaker?

After pumping in tens of millions of dollars to build a Clubhouse, Learning Center, Maintenance Yard, Driving Range, and make various improvements to the golf course did Galloping Hill turn a profit in 2013?

To try to answer that question and in response to an OPRA request the county sent a six-page pdf in the smallest possible font-type and the most confusing possible layout of what appear to be separate Revenue/Expense figures for (a) Galloping Hill Golf Course/Restaurant/Banquet-Center/Office-Complex, (b) the Driving Range at Galloping Hill, and (c) Ash Brook Golf Course. Looking at the pdf it is very hard to tell what went on without using special programing to enlarge the numbers to be readable enough to put into a spreadsheet that totals.  Fortunately we have access to such technology and the spreadsheet is linked to at the end of this blog but before we get to it some notes to consider:

  • KemperSports  is a private company managing golf operations and their expense figures as presented in their invoices are not available (without paying $106.37 to review the 1,200 pages*)
  • No detail as to whether items like utilities, employee benefit costs, or property taxes are included in expenses
  • These are the county’s own numbers and they include or exclude what the county thinks they can get away with
  • Ash Brook reported making $106,479 in Food and Beverage money and the total amount of tips Ash Brook patrons forked over was $22.  That either means it was 99.99% vending machine income or Ash Brook golfers are the cheapest gourmands on the planet.
  • Interest Expense on the Debt was a line item only in the Galloping Hill Clubhouse column even though the Driving Range was recently built and there have been improvements at Ash Brook over the years.  The total amount of Interest Expense on Debt reported was $415.  Yes, $415.  That is not a typo.  It is not really $415,000 or $4.15 million as a debt item but $415 (as in less than $500) is the total amount of Interest Expense on the $25 million admittedly spent on capital improvements.

These were my initial impressions after a quick review.  Here is the spreadsheet.  See anything else?

Oh, and the bottom line on the Galloping Hill Golf Course/Restaurant/Banquet-Center/Office-Complex for 2013 using the county’s own numbers including that $415 as the debt expense came to a LOSS of $150,359.  Even when adding back the Driving Range reported net income of $144,396 the entire Galloping Hill facility showed a loss of $5,963.

It was Ash Brook with Net Income of $311,426 that made golf profitable in 2013 (on paper and using the county’s numbers).  Ash Brook which didn’t get $25 million in capital improvements and concentrating only on golf.  Perhaps Oak Ridge might also have been similarly profitable if it had been allowed to stay open as a golf course.

.

.

.

* Official response to an OPRA request for only the invoices KemperSports sent in 2013:

This email constitutes a formal and complete response to your January 2, 2014 OPRA request for “All invoices submitted by Kemper Sports in regard to work performed in 2013”.

The responsive documents comprise an estimated twelve hundred (1,200) pages, and must be reviewed for any redactions required by OPRA.  It will require an extensive effort to complete this task; in accordance with the OPRA, the County will be imposing a special service fee to process same.

Between the assistant OPRA clerk (hourly rate $19.34) and myself, approximately four (4) hours will be needed to review the material and make any redactions necessary (bank account numbers and any other exempt financial information) in accordance with OPRA.  To accommodate your request to have the documents in electronic format, it will take approximately one and a half (1.5) hours to scan in and email the documents (which will have to be sent in numerous batches, so the files are transmitted and not blocked because of size).  In the spirit of OPRA, the work will be charged at the assistant OPRA clerk’s hourly rate; the total special service fee is $106.37.  Alternatively, if you wish to come in and view the documents, only the fee for review and redaction would be applicable.  The reduced special service charge would then be $77.36.

Kemper Cashing In

June 25, 2009 was when KemperSports Management was signed to manage golf operations in Union County.  According to a story at the time:

County officials called the deal with KemperSports another step in its “golf operations turnaround plan,” meant to enhance clubhouse services, including food and beverage, and provide “golf programming, community outreach, sales and marketing, merchandising, while improving profits and providing fiscal control.”

What the deal wound up doing was costing Union County taxpayers tens of millions of dollars to upgrade facilities necessary to earn KemperSports incentive bonuses that were based on GROSS revenues.  The deal comes to an end June 30, 2014 which is why the resolution that will be unanimously adopted tomorrow by the freeholder board reads:

Amending Resolution Number 2011-255, an agreement with KemperSports Management, North Brook, Illinois, to include operational expenses for the management and maintenance of the golf courses as required by the contract document for the period of January 1, 2014 through June 30, 2014 in an amount not to exceed $3,112,919.00.

Back to the nj.com story:

Last year (2008), Galloping Hill generated a profit of $30,000 on $1.7 million in revenue, from 40,199 rounds of golf played, county records show. Ash Brook, meanwhile, lost more than $232,000 on $1.2 million in revenue, from 32,670 rounds of golf. Oak Ridge lost $450,000 on $1.4 million in revenue, from 29,130 rounds of golf.

That comes to $4.3 million in revenue from the operation of three golf courses that cost $4.952 million to run (if county numbers are to believed) and now the county is paying $3.1 to KemperSports alone for SIX months of management services that does not consider all the:

  • KemperSports incentive fees
  • Salary and benefits for county employees still involved in golf operations (Armanado Sanchez for one)
  • Golf operation consulting that DeCotiis and others provide
  • Construction costs
  • Property taxes
  • Incidentals that the county picks up

If this was the turnaround plan then what must the bankruptcy plan have looked like?

Breaking News: Union County Folds on Galloping Hill Tax Appeal

At the December 5, 2013 freeholder meeting there was an executive session to discuss Kenilworth taxing the Galloping Hill clubhouse/banquet center/office complex:
.

.
Based on an interview with Kenilworth tax assessor Paul Parsons on the situation this is likely what went down:

  1. Kenilworth levied the $120,000 annual tax on only the third floor of the clubhouse with a real value of about $5 million.
  2. There is precedent for this tax as Ursino restaurant on the campus of Kean University was taxed by Union Township.  Kean’s appeal of the $50,000 amount is in tax court now.
  3. The county appealed Kenilworth’s tax and assessment for Galloping Hill on December 2.
  4. Kenilworth immediately filed a counter-appeal looking to levy the  tax on the entire $15 million building.
  5. On Wednesday Kenilworth received a call from County Counsel Robert Barry that the county was withdrawing their appeal on the condition that Kenilworth withdraw their counter-appeal.
  6. On Thursday it was done.

Union County, like any other taxpayer, can still appeal the tax in future years but there are bigger questions:

  • How is Union County even allowed to set upon a venture susceptible to taxation?
  • Are those bonds used to build the Galloping Hill clubhouse now taxable also?
  • Can other towns now tax selected county property that has nothing to do with proper governing and is being used for the private gain of selected insiders instead of for the general welfare of the public?  For example, if Kenilworth can tax the third floor of the Galloping Hill clubhouse would the city of Elizabeth have a case for taxing the sixth floor of the Union County Administration building?

Kenilworth Gets a Little Bit Back

When Union County decided to go into the wedding banquet/restaurant business there was the question of whether Kenilworth could now tax that Galloping Hill property and, if so, for how much….
.

.
The answer is in, per the freeholder Agenda minutes for this Tuesday’s meeting (page 4 of 7):

Authorizing the County Manager to pay taxes for Galloping Hill Golf Course in the amount of an added assessment of $69,341.00 to the Borough of Kenilworth.

By Union County standards it’s not a lot of money to be noticeable (in the ballpark of what they pay outside counsel to handle a lawsuit* or what a Department Head might extort from vendors in a typical year) but for Kenilworth (or most other cities that have to pay taxes to Union County) every little bit helps.
.
.
.
* Also on the agenda for this Tuesday:

Amending Resolution Number 2012-763, to increase the appropriation to LaCorte, Bundy, Varady & Kinsella, Union, New Jersey, in the matter entitled Paul Takacs v. UC, et als. in an amount not to exceed $10,000.00 for a sum not to exceed $75,000.00.

.

UCCF: 11/14/13 – Golf Costs 2013

2013-918 CHAIRMAN LINDA CARTER: Amending Resolution Number 2012-1039, an agreement with KemperSports Management, North Brook, Illinois, for the operational expenses for the management and maintenance of the golf courses as required for the year 2013 in an amount of $527,205 for a new total contract amount of $5,756,973.00.

Which seems like a bargain if golf (and Red Knot) operations bring in $6.3 million in 2013 as claimed:

.

.

But will they?   Here is the full Q&A from the freeholder meeting on this resolution:

.

.

And here are the facts according to the check registries through November 8 2013:

KemperSports: $5,116,022.87

UCIA: $138,121.43

Other Expenses from Check Registry: $3,372,934.79

Armando Sanchez: $110,004 salary + benefits

Add on another $640,950 to Kemper for the last two months (presuming they reach the limit set in this resolution) and we have total expenses of $9,378,033.09 not including benefits for Armando Sanchez and salary and benefits for any other county employee(s) working on the golf courses or any other expenses hidden in the check registry or utilities or property taxes (which Kenilworth is now looking for).  Also excluded is real debt service (though the payments to Claremont and M&M for construction costs in 2013 could serve as an approximation).

Add it all up and believe $6.3 million as a revenue number and we come up with a total loss from golf operations of $3 million for 2013 (and all future years as long as this regime reigns).  How much did they say that Oak Ridge was losing annually?